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Below you will find the law promoting tourism and ecological development in Northern Panama, which includes Porta Norte. You can find the incentives in Chapter V, which includes details on exemptions from import duties, property taxes, and income tax. You can find the original document below:
Law 16
April 21, 2015
Declares the North Panama area a Zone of Ecological and Tourist Interest and of Ethnocultural and Historical Protection, and enacts other provisions.
The National Assembly decrees:
Chapter I
General Provisions
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Article 1. The North Panama area, comprising the corregimientos of Alcalde Díaz, Caimitillo, Chilibre, Ernesto Córdoba Campos, and Las Cumbres, whose boundaries are described by Law 42 of 2009 and Law 29 of 2012, is hereby declared a Zone of Ecological and Tourist Interest and of Ethnocultural and Historical Protection.
It is the responsibility of State institutions to collaborate in the development of this area by integrating it into their operational plans and allocating the necessary resources in accordance with their budgetary capabilities and the applicable legal framework.
Article 2. The primary objective of declaring the Zone described in the preceding article is to recognize, incentivize, and promote the North Panama area to ensure its sustainable development based on responsible community-based tourism, which will serve as a means to combat local poverty and foster entrepreneurial capacity-building in the communities, in accordance with the responsible use of natural resources. Likewise, promote the protection of the ethnic, cultural, historical, and scenic heritage that is an integral part of this region, so that the State makes the necessary investments to ensure the human development of its population and transform it into a model zone that can be replicated throughout the country.
Article 3 For the purposes of this Law, the following terms shall be understood as follows:
Community tourism entrepreneur. An adult whose primary activity is running a family- or organization-based tourism business tied to their rural territory and local focus, characterized by a deep connection to the land, a more equitable distribution of wealth, promotion of nature conservation, the forging of local alliances, and the sustainable use of resources, while fostering exchange and multicultural appreciation.
Etnocultural. A set of customs and traditions that define an ethnic group or race.
Shared room offers. Those offered in family homes with a maximum of two guest rooms, which must comply with the requirements established by the Panama Tourism Authority.
Intangible cultural heritage. Uses, representations, expressions, knowledge and techniques, along with the instruments, objects, artifacts and cultural spaces that are inherent to communities, groups and, in some cases, individuals who recognize themselves as an integral part of their cultural heritage.
Intangible cultural heritage, which is transmitted from generation to generation, is constantly recreated by communities and groups in response to their environment, their interaction with nature, and their history, thereby instilling in them a sense of identity and continuity and contributing to the promotion of respect for cultural diversity and human creativity.
Community Tourism Strategic Plan. A method that seeks to establish means, goals, and objectives for developing the tourism product, exploring external opportunities and internal strengths and weaknesses, and includes strategies to generate beneficial changes for the community in the short and long term, as well as the implementation of controls and the management of alliances with other state institutions and local authorities.
Organized local residents. A group of people linked to a local territory, who organize themselves de facto or de jure for a common purpose.
Safeguarding intangible cultural heritage. Measures aimed at ensuring the viability of intangible cultural heritage, including identification, documentation, research, preservation, protection, promotion, enhancement, and transmission thru formal and non-formal education.
Community-based tourism. The community’s relationship with visitors from a cultural perspective, in the development of planned trips with the organized participation of its members, ensuring the proper management of natural resources, the appreciation of its heritage, the cultural and territorial rights of nationalities and peoples, and the equitable distribution of the benefits generated.
Cultural/ethnic tourism. An activity that generates travel motivated by the discovery and/or study of the tangible and intangible cultural heritage existing in Panama. It includes indigenous communities and their diverse cultures because of their importance.
Ecotourism. A way of traveling to natural areas that aims to minimize negative environmental and sociocultural impacts and, moreover, generates economic and financial opportunities for the benefit of protected areas and local communities.
Article 4. For the purposes of this Law, only intangible cultural heritage that is compatible with existing international human rights instruments and with the imperatives of mutual respect among communities, groups, and individuals, and of sustainable development shall be taken into account.
Intangible cultural heritage is manifested, in particular, in the following domains:
Oral traditions and expressions, including language as a vehicle of intangible cultural heritage.
Performing arts.
Social uses, rituals, and festive events.
Knowledge and uses related to nature and the universe.
Traditional artisanal techniques.
Chapter II
Community-based tourism
Article 5. Community-based tourism is established as a tourism product to be developed nationwide, aimed at promoting ecological and cultural tourism in rural areas by fostering family-run or community-based enterprises, in order to encourage communities to participate in the planning, development, and sustainable use of their local resources, thereby enabling them to achieve a better quality of life.
The objective of the tourism product outlined in this article will be developed in accordance with the Community Tourism Strategic Plan, which must be drawn up jointly by the community and the Panama Tourism Authority. The latter will also be responsible for providing the necessary follow-up to ensure that the objectives are achieved.
Article 6. Community tourism, which must be carried out in accordance with the provisions of the Community Tourism Strategic Plan, includes activities such as tourist lodging establishments, public tourist accommodation, visitor facilities, community room rentals, rural hotels, rural hostels, and camping areas. Additionally, it includes food and beverage services such as rural restaurants, fondas, local food shops, Creole cuisine services, tours by local and national operators, local guide services, culinary routes, as well as the organization of recreational, cultural, and educational activities within the communities, all within the framework of sustainable development.
Chapter III
Culture, History, and Ethnicity
Article 7. Culture, history, and ethnicity will be promoted and developed by community-based tourism as integral parts of a population’s identity.
The National Institute of Culture shall promote and ensure that community-based tourism includes culture, history, and ethnicity in its implementation and development. To achieve these ends, the National Institute of Culture shall establish committees for the protection and rescue of tourist sites, promote the creation of museums, and organize cultural and ethnic fairs and events with the participation of community-based tourism and the community.
Article 8. The National Institute of Culture will promote and develop activities aimed at disseminating and stimulating culture, promoting history and ethnicity throughout the national territory, either directly or in cooperation with and with the participation of municipalities and community tourism entrepreneurs.
Article 9. For the protection of archeological sites or other cultural resource areas, the National Institute of Culture shall designate sites under the management categories of national monuments or zones of cultural interest, which must comply with the technical guidelines established in Law 32 of 2003 and Law 14 of 1982, as amended by Law 58 of 2003.
Chapter IV
Competencies of the Panama Tourism Authority and of the Municipalities
Article 10. The Panama Tourism Authority, as the governing body for tourism activity in the country, shall have the following powers with respect to community-based tourism:
Develop, in coordination with the community, the Community Tourism Strategic Plan.
Grant tourist accommodation permits to those who comply with the Strategic Plan and municipal regulations.
Regularize, process, and resolve requests in accordance with the Community Tourism Strategic Plan.
Advise natural or legal persons engaged in community tourism in order to expedite the procedures for their registration in the National Tourism Registry.
Incorporate specific programs into the Panama Tourism Authority’s Strategic Plan to foster and promote community-based tourism.
Allocate the necessary human and financial resources for the implementation of policies that foster and promote community-based tourism.
Coordinate with other state entities and the local government the development of works and services required by the activity, as well as promote and drive programs aimed at developing activities directly and indirectly related to ecological, recreational, and cultural tourism, which should be geared toward economically benefiting communities located in areas adjacent to where the tourism activities will take place.
Promote community-based tourism nationally and internationally, both thru the campaigns carried out by the Panama Tourism Authority and thru its ongoing outreach efforts.
Advise and train public entities, such as municipalities, autonomous institutions, and private organizations, to promote actions that foster and develop community-based tourism.
Promote the development of specific training programs for community tourism entrepreneurs in collaboration with the National Institute for Professional Training and Human Development.
Ensure compliance with the provisions of this Law.
Article 11. The municipalities shall have the following powers:
Establish mechanisms for organized communities to participate in local tourism development planning.
Establish the necessary conditions to develop community-based tourism by implementing policies that promote the sector based on sustainability criteria in relation to the municipality’s tourism development.
Establish a local tourism management office to encourage coordination of the community’s tourism activities and competent regulation, for which the corresponding municipal ordinance will be drafted.
Chapter V
Incentives
Article 12. Community tourism entrepreneurs will be eligible for the following incentives:
Full exemption from import duties for a period of five years on the importation of materials, furnishings, furniture, and equipment used exclusively in the remodeling and equipping of tourist accommodation establishments previously registered in the National Tourism Registry.
This incentive will be granted if these materials are not produced in the country or are not produced in sufficient quantity or quality, or at a similar price. Likewise, all equipment imported by the company for the purpose of contributing to energy savings or necessary for the security of the public accommodation establishment’s premises is exempt, excluding the importation of weapons.
For the purposes of this article, “equipment” shall be understood to mean vehicles with a minimum capacity of eight passengers, motorboats, boats, or sporting goods used exclusively for tourism activities. Such vehicles shall be exempt from the selective consumption tax on certain goods and services. A lower capacity will be permitted when the vehicle is equipped with a special system to serve persons with disabilities, provided it is used exclusively for tourist operations.
Full exemption from property tax for a period of ten years on land and improvements used for tourism development activities registered in the National Tourism Registry. In the case of mixed-use buildings, the area occupied by the tourist establishment must be segregated in order to qualify for the tax exemption.
Full exemption from income tax derived from the company’s tourism activities for a period of five years.
Loans granted for the tourism investments referred to in this article, made within the first two years from their registration, shall not be subject to the withholding tax established by Law 4 of 1994 and its amendments, provided that the borrowers of such facilities are registered in the National Tourism Registry.
In order for a natural or legal person to be eligible for the tax benefits under this Law, they must submit to the National Tourism Registry the project they will develop, indicating the project details, which will be provided to the Tourism Authority of Panama via the registration application form.
For the purposes of the right to obtain tax incentives, the deadline for registering interested parties in the National Tourism Registry shall be ten years, counted from the approval of the Strategic Community Tourism Plan for the area or region.
Article 13. For the purposes of the right to obtain tax incentives, the deadline for registering interested parties in the National Tourism Registry shall be ten years, counted from the approval of the Strategic Community Tourism Plan for the area or region.
Chapter VI
Obligations
Article 14. For the purposes of this Law, beneficiaries of the incentives shall have the following obligations:
Keep its legal entity status up to date, where applicable.
Comply with the requirements and obtain the permits required by applicable laws.
Maintain practices in line with the sustainable development model established in the Community Tourism Strategic Plan.
Have 75% of the company’s staff be members of the community or neighboring areas. Exceptions to this obligation will be regulated by the Panama Tourism Authority.
Comply with the rules established in the Labor Code.
Comply with the parameters set forth in the Community Tourism Strategic Plan and the regulations of this Law.
Chapter VII
Financing
Article 15. The development of community-based cultural tourism will be considered a high-priority activity for the Panama Tourism Authority, the National Institute of Culture, the National Environment Authority, and the Municipality of Panama. Each institution shall allocate the necessary resources from its annual budget for this purpose on a mandatory basis.
Article 16. Community-based cultural tourism enterprises will be able to access the following funding sources:
Support programs for micro, small, and medium-sized enterprises currently in effect under national legislation.
Funds from public and private institutions or companies, as well as from governments or foreign entities, both public and private.
Chapter VIII
Oversight, Infractions, and Sanctions
Article 17. The Ministry of Economy and Finance and the Panama Tourism Authority shall have the power to oversee all aspects concerning compliance with the obligations undertaken by tourism companies that have benefited from the incentives granted under this Law.
Article 18. The following constitute violations of this Law:
The sale or de facto transfer of ownership of the property on which the tourism operation is located to companies that do not qualify as community tourism beneficiaries under this Law.
Behavior or actions that offend the morals or good customs of the local population.
Violation of current environmental legislation.
Failure to comply with the tourism quality standards authorized by the Panama Tourism Authority for this activity.
The sale, lease, loan, or negotiation in any form of equipment or items that have been exempted under this Law, or their use for any purpose other than that for which the exemption or benefit was granted.
Failure to comply with any of the provisions of this Law.
Article 19. The violations of this Law established in the preceding article shall be sanctioned as follows:
The infraction referred to in numeral 1, with the definitive suspension of benefits and incentives.
The infractions specified in items 2, 3, 4, and 6, with suspension of benefits and incentives. The Executive Branch, thru the Panama Tourism Authority, shall regulate when the suspension will be temporary or permanent.
The violation referred to in paragraph 5 shall be subject to a fine equal to ten times the amount of the exemption, without prejudice to any criminal or administrative sanctions that may be imposed.
Any other violation or breach of the provisions of this Law shall be sanctioned in accordance with the provisions of Law 80 of 2012, as well as with those of the General Environmental Law and complementary legislation, without prejudice to any corresponding civil liability.
Chapter IX
Final Provisions
Article 20. The North Panama area described in Article 1 of this Law, by virtue of being a Zone of Ecological and Tourist Interest and of Ethnocultural and Historical Protection, shall be considered a pilot area for community-based tourism. Consequently, the Panama Tourism Authority shall, upon the entry into force of this Law, begin drafting the Strategic Community Tourism Plan for this Zone.
The Panama Tourism Authority is authorized to incorporate regions that, after the entry into force of this Law, request to develop community-based tourism.
Article 21. Companies that do not enjoy tax incentives at the time this Law comes into effect and that are engaged in community tourism activities, as duly demonstrated, may avail themselves of the benefits of this Law provided they comply with all the provisions set forth herein.
Article 22. The Panama Tourism Authority, in coordination with municipalities and local communities, will promote and drive programs aimed at developing activities directly and indirectly related to ecotourism, recreational tourism, and cultural tourism. These programs must also be designed to economically benefit the communities located in areas adjacent to where the tourism activities will take place.
Article 23. The implementation of activities related to achieving the objectives of this Law, with respect to protected areas, shall be coordinated by the National Environmental Authority, in accordance with the guidelines set forth in the legal provisions establishing each of these areas.
Article 24. The State, thru the institutions designated in this Law, shall annually include in the General State Budget the necessary appropriations for the implementation of this Law.
Article 25. Paragraph 8 of Article 9 of Decree-Law 4 of February 27, 2008, is hereby repealed.
Article 26. Article 33 of Decree-Law 4 of February 27, 2008, shall read as follows:
Article 27. This Law amends Article 33 and repeals paragraph 8 of Article 9 of Decree-Law 4 of February 27, 2008.
Article 28. This law shall take effect on the day following its promulgation.
Article 33. Distribution of jurisdiction. For the purposes of distributing jurisdiction over the Authority’s administrative acts, the first instance shall be heard by the operational directorate or the corresponding body.
In the Authority’s administrative proceedings related to registration, monitoring, oversight, and cancelation of registrations in the National Tourism Registry, the first instance shall be conducted before the Directorate of Tourism Investments. Such administrative actions may be appealed to the Authority’s General Administrator. Once the resolution resolving the appeal becomes final and unappealable, the administrative remedy is exhausted.
Project 60 of 2014, approved in the third debate at the Palacio Justo Arosemena, Panama City, on the sixteenth day of March in the year two thousand fifteen.
President: Adolfo T. Valderrama R.
The Secretary General: Franz O. Wever Z.
NATIONAL EXECUTIVE BRANCH, PRESIDENCY OF THE REPUBLIC, PANAMA, REPUBLIC OF PANAMA, APRIL 21, 2015.
President of the Republic: Juan Carlos Varela R.
Minister of Commerce and Industry: Melitón A. Arrocha
